Buy a new-build home with just a 2.5% deposit: check eligibility and calculate your deposit, equity loan and monthly payment.
By Scheme Tools Editorial Team · Last updated: 2026-10-10
Your First Home — Deposit & Mortgage Calculator
See how the announced 2.5% deposit + 20% government equity loan splits a new-build purchase.
🆕 Just announced. Full details (income caps, regional price caps) come at the Autumn Budget on 28 October 2026; registration opens by end of 2026. Figures below use the announced structure only.
Your deposit (2.5%)£6,250
Government equity loan (20%)£50,000
Your mortgage (77.5%)£193,750
Est. monthly mortgage payment*£1,040
*Illustrative: 5% interest, 30-year term. Equity loan interest-free initially — rate after the interest-free period TBC at the Budget. Always check the official terms on GOV.UK before deciding.
Your First Home is a new government scheme to help first-time buyers in England who cannot rely on family money for a deposit. It was announced by Prime Minister Andy Burnham, with full details due at the Autumn Budget on 28 October 2026 and registration opening by the end of 2026.
The announced structure: a government-backed equity loan of 20% of the purchase price, a minimum deposit of just 2.5%, and a standard mortgage for the remaining 77.5%. The equity loan carries no initial interest charges.
The government projects participants could save several hundred pounds a month compared with conventional 95% mortgages. The scheme applies exclusively to newly built properties and is limited to England.
Important details are still to be confirmed: household income caps, deposit maximums, regional property price limits, how long the interest-free period lasts, and what interest applies afterwards. Safeguards are promised so the scheme targets genuine need.
Note: this is an independent guide, not a government website. Do not sign anything or pay any deposit until the official terms are published on GOV.UK after the Budget.
Full details at the Autumn Budget on 28 October 2026; registration opens by the end of 2026.
How much deposit do I need?
A minimum of 2.5% of the purchase price, plus a 20% government equity loan and a 77.5% mortgage.
Does it apply to existing homes?
No — newly constructed properties only, and only in England.
Is the equity loan really interest-free?
It carries no initial interest charges. What happens when the interest-free period ends will be confirmed at the Budget — read that part carefully.
Are there income limits?
Caps on household incomes and property values are expected but not yet announced.
Is this a government website?
No. This is an independent guide. Official terms will be on GOV.UK.
How does the 20% equity loan get repaid?
You repay the equity loan when you sell the home, reach the end of the loan term, or choose to buy out the government's share in stages. The repayment is based on the property's value at that time, so the government shares in any price rise or fall. Exact repayment rules will be published at the Budget.
What kind of mortgage do I need with Your First Home?
You will need a standard repayment mortgage for 77.5% of the purchase price alongside the 2.5% deposit and the 20% equity loan. Because your mortgage is smaller than usual, monthly payments should be lower than a conventional 95% mortgage — that is the main attraction of the scheme.
What happens when the interest-free period ends?
The government has confirmed the equity loan starts interest-free but has not yet said when interest begins or what rate will apply. This is one of the key details to read carefully at the Autumn Budget on 28 October 2026, because it determines your long-term cost. Rules may change — verify on GOV.UK.
Is there a maximum property price under the scheme?
Regional property price caps are expected but have not been announced yet — they are due at the Budget. The scheme is aimed at genuinely priced new-builds for first-time buyers, not luxury developments, so expect caps roughly aligned with local first-time-buyer markets.
What should I do now to prepare for registration?
Check your credit score and clear any errors on your credit file, work out what monthly payment you can genuinely afford, and start gathering ID, payslips, and bank statements. Do not pay any reservation fee or sign a contract until the official terms are published on GOV.UK after the Budget.
Can I combine Your First Home with a Lifetime ISA?
The scheme is a purchase route, not a savings product, so your Lifetime ISA savings can still form part of your 2.5% deposit — provided you meet the LISA's own rules on first-home purchases. Keep both sets of rules in mind, and get independent advice if you are combining schemes.
What if house prices fall — do I still owe the full equity loan?
With an equity loan, the amount you repay is linked to the property's value at the time of sale or buy-out, so the government shares the loss as well as the gain. That protects you from negative equity on the equity-loan portion — though your mortgage lender still expects full repayment of their 77.5%.
Related questions
Community Q&A
Community is in beta — questions appear instantly after an automatic check.
No questions yet — be the first to ask!
We use no tracking cookies. Only your cookie choice is stored on your device. Privacy Policy
